The Dow Jones Industrial Average surged over 450 points on Friday, reaching a new record high above 40,200.00. Investor sentiment was boosted by hopes for rate cuts from the Federal Reserve in September, despite an acceleration of US PPI wholesale inflation. Markets are fully expecting rate cuts with a 95% chance of a trim on September 18. The Dow Jones closed the trading week nearly reaching the 40,000.00 mark.
US core PPI wholesale inflation for June rose to 3.0% YoY, higher than the forecasted 2.5%. Despite this, markets are focusing on the decline in Consumer Price Inflation (CPI) earlier in the week to support rate cut expectations. Rate market bets predict at least a quarter-point rate cut in September and at least three cuts by the end of 2024, exceeding the Fed’s projected cuts.
The University of Michigan’s Consumer Sentiment Index dropped to a seven-month low of 66.0, indicating consumer worries about the economic outlook. 5-year Consumer Inflation Expectations slightly decreased to 2.9% in July. However, investors are disregarding the higher expectations compared to the Fed’s 2.0% target. Despite these concerns, the Dow Jones continues to climb, reflecting positive investor sentiment.
In terms of individual stocks, Intel Corp. experienced a significant increase, rising nearly 3% as it continues its growth in AI-related cloud computing subscriptions. Despite better-than-expected second-quarter earnings, JPMorgan Chase & Co. saw a decline in shares after reaching all-time highs. The Dow Jones ended the week with a notable performance, up over 6% in 2024.
The Dow Jones Index is now at a fresh all-time high of 40,260.24, showing a 6.82% increase in 2024. Daily candles are trading above key technical levels, with bidders aiming to maintain this upward momentum. The index has seen a substantial increase from its recent low in late May, with strong support levels around the 50-day EMA near 39,095.00.
The Dow Jones Industrial Average consists of 30 of the most traded stocks in the US and is price-weighted. Factors such as quarterly earnings reports, macroeconomic data, interest rates, and inflation play a key role in driving the index. Dow Theory, developed by Charles Dow, is used to identify market trends by comparing the direction of the DJIA and the DJTA. There are various ways to trade the DJIA, including ETFs, futures contracts, options, and mutual funds, providing investors with exposure to the overall index.
